Austin Real Estate Blog

Austin is maintaining a low unemployment rate. Due to the technology boom, the area has seen a steady job market for many years, and will continue to do so. With the addition of many new companies in the area, the job market is expected to remain solid. Many commercial buildings in the area are seeing an increase in occupancy that has helped to create more jobs.

There has been an increase in unemployment, from 3.7 last year to 4.5 in 2008. However, the central Texas job growth rate indicates there are over 18,000 more jobs this year than last. Dell closed two plants in the Austin area, taking about 2800 manufacturing jobs off the market. That was the biggest hit, though reports indicate that almost every other sector showed an increase in employment. With more new tenants choosing Austin as base for business, the unemployment rate should remain lower than in other areas. When compared to statewide unemployment rates of 5%, the Austin job market is still as healthy as ever, even with the recent changes.

In North Austin, the Frontera Crossing commercial building has expanded one tenant, and added a new one. Combined this will create about 300 new jobs. Dashiell LLC, an electrical engineering and design firm has leased space in the office. Field Asset Services, a mortgage field services company will be expanding from 400 to 650 employees in the same building. This brings the occupancy for the Class A commercial building to 70% and promises more job growth for Austin.

Construction began in February 2008 on two luxury apartment complexes in the North Austin area, both constructed by the Texas division of Alliance Residential Company: Alliance Communities. Broadstone Travesia will be a 396 unit, built next to Travesia Corporate Park and Broadstone Grand Avenue, a 280 unit complex, will be build near Round Rock on the Grand Avenue Parkway.

The Travesia complex is scheduled for completion by mid-2009. Rents on the one-, two-, and three-bedroom apartments will range from $785 to $1,465 per month. It will be located across from La Frontera, a mixed-use development containing retail and office space, residential areas, and financial institutions.

The Grand Avenue project is also expected to be completed in 2009, offering one-, two-, and three-bedroom units ranging in rent from $760 to $1,430 per month. The apartment complex will be located at the northeast area where Grand Avenue and Interstate Highway 35 intersect.

Construction financing for the Travesia apartments is being provided by Guaranty Bank, while Bank of America is providing the financing for the Grand Avenue project.

This new construction is indicative of the Austin area’s healthy and growing economy. Austin continues to attract major corporations to locate their headquarters in the area, and has been a leader in a new growth industry - “green” jobs and construction. As concerns over global climate change and warming grow, Austin stands ready to answer with alternative energy sources and sustainable landscaping, reusing waste water to irrigate lawns and plantings, designing new buildings with existing energy sources - natural sunlight and warmth, as well as cooling - in mind.

The new apartment complexes will provide housing for an expected influx of workers in the north Austin area.

The job market in Austin is steady, and has actually grown a bit, adding nearly 22,000 jobs in the past year. The hospitality industry posted 1,500 new jobs in March while the government sector added 1,600. Transportation and utilities also posted decent gains for the year, adding 4,000 jobs. Unemployment rates for the state as a whole stayed steady at 4.2 percent.

Statewide, Texas has maintained a job growth rate of 2.1, twice that of the nationwide rate of 1 percent in 2007, and the market is predicted to remain strong for the next year at least. In spite of a national downturn, Texas, and Austin in particular, have managed to sustain a healthy environment for job opportunities.

A new initiative for creating jobs can be found in Austin’s zero-waste proposal. Reuse and recycling efforts - in thrift stores and recycling plants, for example - could create up to 500 new jobs in the “green-collar” industry. Also, due to initiatives proposed by Austin Mayor Will Wynn as part of his “Climate Protection Plan” announced last year, these green-collar workers will be increasingly in demand as people look to revamp their homes, schools, government and office buildings to be more environmentally friendly.

The growth doesn’t stop there. The Austin Chamber of Commerce announced an ambitious plan in March of this year to create 117,000 new jobs over the next five years, adding over $10 billion to the area payroll. Part of Opportunity Austin, this next phase focuses on convergence technology, digital media, green industries, office and health care jobs, and life sciences. The chamber is looking to attract corporate headquarters as well as establish a medical school to attract medical device and biotech industries.

Even though 2007 was a record breaking year and the national economy appears to have taken a hit, Austin is going gangbusters. You’ve got to know things are going well when the mainstream media says the “Austin economy spanks the competition”. Here’s to a great 2008! If you’re thinking about moving to Austin, give us a call. It would be our pleasure to help!

bizjournals.com
Austin economy spanks the competition
Thursday January 31, 3:41 pm ET
High-tech, a booming film industry and the University of Texas all helped propel Austin to the top of Forbes’ 2008 list of America’s Fastest Growing Metros.The magazine ranked Austin No. 1 among the nation’s 100 largest metropolitan areas. The list sorted cities by their anticipated gross domestic product growth between 2007 and 2012. Austin’s GMP, or the value of goods and services produced in the area, is expected to climb 32 percent over the five-year period.
Forbes credits the local boom to high-tech employers like Dell Inc. (NASDAQ: DELL - News) and IBM (NYSE: IBM - News) as well as the University of Texas, which is producing ample engineering talent. …

Forbes used GMP forecasts provided by Moody’s Economy.com. …

Published January 31, 2008 by the Austin Business Journal

What Did Interest Rates Do This Week?
** according to Freddie Mac **
 
30-yr Fixed - Higher
This Week:  5.68%
Last Week:  5.48%
1yr Ago:  6.34%
 
15-yr Fixed - Higher
This Week:  5.17%
Last Week:  4.95%
1yr Ago:  6.06%
 
5/1 ARM - Higher
This Week:  5.32%
Last Week:  5.13% 
1yr Ago:  6.04%
 
Highlight of This Week’s Major Economic Reports
 
According to Freddie Mac, “Mortgage rates ended their four-week descent this week, with average rates on 30-year and 15-year fixed rate mortgages coming up by about 0.2%.  This increase completely erased the previous week’s decline. The movement in fixed mortgage rates was broadly consistent with the movements of Treasury bonds over the week.”
 
Amid continued concern over the credit market putting a squeeze on the rest of the economy, the Federal Reserve cut short-term rates for the second time in eight days.  While this bodes well for rates on such things as credit cards, this move may actually cause mortgage rates to trend higher.
 
What will cause mortgage rates to remain at lower levels, however, is continued economic weakness.  Job growth, which is a good indicator of economic activity, was negative in January, much to the surprise of market analysts.  There was a net loss of 17,000 jobs last month as businesses trimmed their payrolls in light of these uncertain times.  The unemployment rate is now at 4.9%.
 
Meanwhile, New Home Sales dropped another 4.7% in December with prices being cut 12% from November.  Many are hoping that the recent drop in mortgage rates will help to spur sales.
 
For some good news:  GDP estimates showed a positive 0.6% for the 4^th quarter of 2007.  While this figure is still weaker than expected, the fact it was “positive” should help to stave off the recession talks for another month.
 
What to Look for Next Week
 
Not much noteworthy activity on slate for next week, so look for stock market activity to once again drive the direction of mortgage rates.
 
Short-Term Rate Outlook
 
Stable
 
Tools to Help Your Buyers & Sellers
 
Rate Protection from Coldwell Banker Mortgage can provide that win-win situation for your clients!
 
Whether rates go up or down, with Pre-Purchase Rate Protection, it doesn’t matter!  Protect your buyers’ purchasing power by offering them the ability to cap their interest rate for up to 90 days at no cost while still offering a “float down” option to take advantage of possible rate improvements.
 
Call me to learn more!
 
Stay Informed:  What’s in the News
 
“More Strength in Texas Labor Market” from the Texas A&M Real Estate Center
 

The Texas economy continues to produce more jobs than the national economy, according to the latest report from the Real Estate Center at Texas A&M University.

Texas nonfarm employment rose 2.2 percent from December 2006 to December 2007 compared with the 0.9 percent annual growth rate for the United States.

The state’s seasonally adjusted unemployment rate fell from 4.7 percent in December 2006 to 4.5 percent in December 2007.

The state’s mining industry ranked first in job creation, followed by professional and business services, the leisure and hospitality industry and the financial activities industry.

All Texas metro areas except Killeen-Temple-Fort Hood had positive employment growth rates from December 2006 to December 2007. McAllen-Edinburg-Mission ranked first in job creation followed by Tyler, Austin-Round Rock, and Brownsville-Harlingen. Midland had the lowest unemployment rate, followed by Amarillo, Lubbock, Odessa and College Station-Bryan.
 
Marie Funston
Mortgage Advisor
Coldwell Banker Mortgage
Tel.:  (512) 691-6757
Fax:  (512) 343-1224

I’ve got to say the whole time the boom was going on in the last 18 months and our developments were selling out as fast as we could build them, I still felt that the downtwon market was being overbuilt. As Neal mentions in the excerpt below, the jobs in dowtown Austin are just not numerous enough or well paying enough (given all the state and local government jobs) to support the amount of $300+/sq ft condos going up. Some of these condos have MONTHLY HOA fees in excess of $600. That’s the cost of a $100k mortgage on a home.

Needless to say, there is bound to be some number of folks who get burned by the glut. If you’re in the market for a downtown condo, make sure you strike a good deal. You might be facing a lot of competition from the new builders if you decide to sell in the next 3 years.

Excerpt from the Neal Spelce Austin Letter.

Despite the mantra being heard of “live and work downtown,” Austin traffic patterns could change dramatically once the surge in downtown high-rise condo construction nears completion and occupancies reach saturation.

The problem is simple. Currently there are not enough jobs in the downtown area to support full occupancy of the new high-rise condos and apartment buildings that are nearing completion. And the pace of job creation in the downtown area is not yet vigorous enough to meet that demand, should the demand materialize. So, living downtown and walking to work may not be possible for hundreds of residents in the Central Business District.

What does this mean? Well, it means that many of those who rush to live downtown will find themselves part of a new traffic pattern during rush hour. You might call it a reverse commute. Cars will start streaming out of the downtown area to places of employment at the same time cars are converging on the downtown area from the suburbs and other neighborhoods.

This potential alteration is based on the assumption that downtown living units will be occupied at a reasonably fast clip (as owners, developers and lenders are hoping!!!). With that assumption, the only thing that could stem this traffic pattern change would be for more major employers to move into the downtown area. These major employers would need to pay a higher-than-average wage so their employees could afford these new units. So far, not many major employers have rushed to acquire pricey downtown space for their companies.

Remember, the majority of the employees in the downtown area right now draw government paychecks; they don’t fit the target profile for the new condo and apartment marketers. When the day is done, they head to their living units in the less expensive parts of town. It will be interesting to watch this develop as our downtown undergoes dramatic changes.